Retailers selling coffee by the cup might be missing the boat. Even though many convenience retailers are completely capable of selling coffee in to-go carafes or “box” packages, they willingly forfeit those sales to specialty coffee retailers, according to Gary Allanson, president and CEO of International Dispensing Corp. (www.idcdispensing.com).
“One of the trends we’ve been watching over the past few years is the specialty coffee shops dominating this particular part of the category,” says Allanson, whose company creates custom Beverage Carafes for convenience store and grocery retailers, among others. “In particular, Dunkin’ Donuts and Starbucks have been carrying this package for the past three to four years. Dunkin’ Donuts will sell a minimum of five a day in their stores, but some sell as many as 10 to 12 or even more.”
Convenience retailers like White Hen and 7-Eleven Inc. have seen the light;both recently inked deals to add carafes from IDC to their stores. 7-Elevenrolled out carafes to select stores earlier this month, while White Hen addedthem to its 200-plus Chicago area stores in September. Customers can fill thecarafes themselves; on average, it takes about 2.5 minutes to fill a carafe,which contains a gallon of coffee.
To get the program off to a good start, White Hen is marrying the carafe to its bakery program and including it in promotions for its catering business, according to Ari Frank, White Hen’s marketing and advertising manager. In addition, the chain is reinforcing the capability in its monthly point-of-purchase kit and through print media.
Allanson’s company sidestepped the “space” challenge by developing a thin,low-profile display that explains the carafe’s various uses, communicates pricepoints—the SRP is $11.99, at a 56% to 62% profit margin—and describes pictoriallyhow to fill the unit. In addition to IDC, other suppliers populating this spaceinclude LBP Manufacturing (www.lbpmfg.com) andBig Joe’s CafÈ (www.bigjoecoffeebox.com).
“This package does not cannibalize single-serve sales,” Allanson says. “It’san incremental purchase that serves a need that’s not being met. The customerwho is buying this package is the same customer who’s already coming in thedoor, ranging from blue-collar workers to white-collar workers to soccer momsand dads. It’s not like you’re going to begin pulling in Dunkin’ Donuts’ customers;it’s really about protecting the customer base you already have.”